CANBERRA, Australia (Radio Australia, Jan. 9) - With Vanuatu's tax haven sucking up around US$169 million each year, the Australian Tax Office (ATO) is up in arms.

The ATO claims Vanuatu is fourth on the list of countries believed responsible for concealing taxable income, which should have been claimed by Australia.

As a result, the ATO has made tax havens in Vanuatu one of its priority issues this year.

Radio Australia reports the use of tax havens is growing fast and the Internet is helping. It has made it easier to market products such as offshore credits and debit cards that are used by tax evaders to access to their hidden money.

According to the report, in the past, the main culprits using haven to avoid tax, were high wealthy individuals and big businesses.

David Cox, Australia's Shadow Revenue Minister says the problem is now much wider.

"The new development is that smaller tax payers, small businesses, individuals…I mean high wealthy individuals and in fact probably some very ordinary middle incomes are now getting involved in foreign tax haven as a means of tax avoidance and evasion," said Cox.

Cox says the Australian government is losing billions of dollars ever year from tax havens.

"Well the total flow of funds out of Australia during the last financial year was more than five billion dollars."

"About half or more than half went to Bermuda. There are similar flows of funds now occurring. This has been the case during the past years and it is escalating," said Cox.

"I would say that is certainly the case that Australia’s revenue is being evaded and avoided hundreds of millions of dollars and probably billions of dollars a year."

Cox says the Labor Party has announced a crackdown on the use of havens and the Opposition will not let the issue dropped.

"We will be using the government to make sure that they are doing something about it."

He says government should do three basic moves in order to stop the culprits.

"The first thing is that, they should identify tax advisers who are marketing these sorts of arrangements. Second, they should be targeting the clients that involved in these special orders…government should find out the status of the problem and the nature of the actual arrangements, and third, is to legislate against the actual arrangements," concluded Cox.

January 9, 2003

For additional reports from Radio Australia, go to PACIFIC ISLANDS REPORT News/Information Links: Radio/TV News/Radio Australia.

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